Three Arrows Capital Co-Founder Su Zhu
Three Arrows Capital (3AC), which incurred massive losses thanks to a broad market selloff in digital assets following the TerraUSD and Luna collapse in mid-May, is exploring options, including asset sales and a rescue by another firm.
As per a Wall Street Journal report, the Singaporean crypto hedge fund is in talks with its credited to buy more time to work out a plan.
Also Read: UST, Luna crashes: Can regulation alone restore investors’ confidence in cryptocurrencies?
Three Arrows Capital, launched in 2012 by Kyle Davies and Su Zhu, had about US$3 billion in assets under management just before the sudden plummeting of the values of TerraUSD and Luna. To explain the collapse in simple terms, the UST stable coin — pegged against the US dollar — was trading at US$80 a coin, but it tanked to 35 cents following a massive selloff. Its sister currency Luna also dropped and became almost worthless.
Earlier this year, Three Arrows Capital invested US$200 million in Luna, but it was effectively wiped out following the collapse of TerraUSD and Luna. Both were among the 10 largest digital currencies before the collapse resulting in the loss of US$60 billion in their market capitalisation.
Davies admitted to WSJ that the collapse caught the founders off guard but they were confident that Three Arrows Capital would be able to withstand the losses. However, the subsequent events in the crypto industry, such as the collapse of bitcoin, ether and other cryptocurrencies, dashed their hopes.
Also Read: What lessons can crypto investors draw from the Luna, UST episode?
A few days ago, crypto trading platform 8 Blocks Capital accused Three Arrows Capital of using its funds of US$1 million to repay lenders and counterparties. 8 Blocks’s CEO Danny Yuan said the crypto hedge fund did not honour an agreement that 8 Blocks Capital would be allowed to withdraw funds any time.
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